The art of negotiation touches every aspect of our lives — we routinely negotiate with our spouses, our children, our landlord, our employer, and so on. It is equally important in business — we negotiate with our customers, our suppliers and our investors. Case studies focus on situations most entrepreneurs will face: research projects, starting a business venture, obtaining investors and licensing a product or invention.

1. Negotiation and
Conflict Resolution
MaRS Discovery District
Entrepreneurship 101 Series
February 12, 2014
Presentation by
Michael Erdle
Practical Resolutions Inc.

3. Introduction
 Negotiation
 Conflict Resolution

4. What is Negotiation?
 Negotiation is:
 a process.
 a structured conversation.
 a means to an end (agreement about something).
 We do it all the time, without really thinking about it.

5. Basis for Negotiation
 Interests
 Rights
 Power

6. Escalation

7. Power
Power Strategies:
Characteristics of Power:
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•
•
•
•
•
•
•
•
•
•
Take action unilaterally
Win at all costs
Attack/Defend
Threaten
Coerce
Withdraw (Take the Ball and Go
Home)
• Physical (or verbal) violence
Adversarial
“Win/Lose” at best
Usually “Lose/Lose”
Extremely expensive
Negative impact on future
relationships

8. Rights
Rights Strategies:
Characteristics of Rights:
• Contracts (guarantee the
minimum)
• Policies, procedures, rules
• Precedent
• Past practice
• Legal action
• Third-party decisions
(e.g. arbitration)
•
•
•
•
•
•
Adversarial
“Win/Lose” at best
Often “Lose/Lose”
Extremely expensive
Time-consuming
Impact on future relationships?

9. Interests
Interests Strategies:
Characteristics of Interests:
•
•
•
•
•
•
•
•
•
•
Identify what’s really important
Dialogue about needs and wants
Honest sharing of information
Maximize results for all parties
Help everyone explore and
understand their own interests,
and interests of other parties
• Needs an ongoing relationship
“Win/win” process
Collaborative
Interdependent
Builds trust
Positive impact on future
relationship

10. Power, Rights, Interests
All out “War”
Unilateral Action
Threats, Coercion
Power
Litigation
Costs
Go
Up
Arbitration
Investigation/Fact Finding
Conciliation
Mediation
Negotiation
Problem Solving
Prevention
Control
Goes
Up
Rights
Interests

11. The “Golden Rule”
“The Wizard of Id”, B. Parker, J. Hart

12. De-escalation

13. Duty to Negotiate
in Good Faith
 Obligation to respect the legitimate interests of other
parties and to deal promptly, honestly, fairly and
reasonably with them.
 Shelanu Inc. v. Print Three Franchising Corp. (Ontario Court of
Appeal)
 Implied in negotiation where there is an imbalance.
 Wallace v. Grain Growers (Supreme Court of Canada)

14. Duty to Negotiate
in Good Faith
Spectrum of contractual duties
Selfish
Selfless
Honesty
Good
Faith
Fiduciary
Duty

15. Duty to Negotiate
in Good Faith
 Fiduciary:
 Trustee
 Corporate Director
 Lawyer
 Good Faith:
 Professional Code of Ethics
 Contract
 Employee/Employer

16. Negotiation Steps
 Distributing Value vs. Creating Value
 Opportunistic
 Problem-solving
 Identify Issues
 What does each side want and need?
 Consider Interests
 Common
 Complementary
 Conflicting

17. Effective Negotiation
 Interests vs. Positions
 “Needs” vs. “wants”
 “Separate the People from the Problem.”
 Soft on the person
 Hard on the problem
 Consider other Options

18. Effective Negotiation
 Seek Objective Alternatives
 Determine BATNA and WATNA
 Best Alternative to Negotiated Agreement
 Worst Alternative to Negotiated Agreement
 Look for a “win-win” solution

19. Effective Negotiation
 Successful relationships are built on communication
and trust.
 Lack of trust leads to “win-lose” or “lose-lose”.
 Negotiation is one way of creating trust – or deciding
whether trust is justified.

20. Multiple Negotiations
 Selfish strategy works in a “winner take all” game.
 Life is rarely like that.
 Most negotiations involve a continuing relationship.
 What happens if there’s a series of negotiations?

21. Multiple Negotiations
 “Tit-for-Tat” strategy is most successful.
 Four key conditions:
 Nice
 Retaliate
 Forgiving
 Generous

22. Multiple Negotiations
1.
The player always cooperates, unless provoked.
2.
The player always retaliates, if provoked.
3.
The player is quick to forgive – co-operate next time.
4.
The game must continue long enough for
the ‘retaliation and forgiveness’ pattern
to affect opponent’s behaviour.

23. Negotiation Styles
 Focus on “winning”
 Focus on relationship

24. Focus
on
Content
Negotiation Styles
Win - Win
Win - Lose
Focus
on
Rela5onship

25. Focus
on
Content
Negotiation Styles
Focus
on
Rela5onship

26. Focus
on
Content
Negotiation Styles
Focus
on
Rela5onship

27. Focus
on
Content
Negotiation Styles
Focus
on
Rela5onship

28. Focus
on
Content
Negotiation Styles
Focus
on
Rela5onship

29. Focus
on
Content
Negotiation Styles
Focus
on
Rela5onship

30. Focus
on
Content
Negotiation Styles
Win - Win
Win - Lose
Focus
on
Rela5onship

31. Power Ploys
 Classic “Hard Bargaining” Ploys
 Extreme claims, small concessions
 “Take it or leave it.”
 Unreciprocated offers
 Threats and warnings
 Attacking the alternatives
 Good cop, bad cop

32. Ways to Respond
 Extreme claims, small concessions
 Tit for Tat – make equally small concessions
 “Take it or leave it.”
 Make a counter offer
 Offer an alternative
 Don’t be afraid to walk away

33. Ways to Respond
 Unreciprocated offers
 Don’t negotiate against yourself
 Wait for a serious counter offer
 Threats and warnings
 Don’t make a counter-threat
 Challenge the underlying assumptions

34. Ways to Respond
 Attacking the alternatives
 Ask for an explanation
 “Why do you have a problem with…?”
 Good cop, bad cop
 Negotiate with the boss
 Use the “good cop” to your advantage

35. Understanding Interests
Common Interests
 Parties want the same things
 E.g. company and workers both want to avoid strikes
and workplace grievances (costs them both money)

36. Understanding Interests
Complementary Interests
 Parties want different things, but they don’t conflict
 E.g. company wants to increase productivity & profits;
workers want better pensions

37. Understanding Interests
Conflicting Interests
 Parties want different and incompatible things
 E.g. company wants to reduce labour costs; workers
want to be paid more

38. Negotiation Skills
 Communication is the key to effective negotiation.
 Assertiveness vs. Empathy
 Effective negotiator is assertive and empathetic
 What you say is often less important than how you say
it.
 Tone
 Body language

39. Negotiation Skills
 Understanding and recognition do not mean
compromise and concession.
 “I understand” vs. “I agree”
 Your own emotions and subconscious brain can hinder
your ability to negotiate effectively.

40. Negotiation Skills
 Listening
 Develop “active listening”
 Understanding
 Acknowledge the other person’s perspective
 Flexibility
 Be open to other options
 Pragmatism
 Accept the best available option

41. Conflict Resolution:
Match Process to Business Goals
 Litigation
 Mediation
 Public
 Private
 Little control over
 Cheaper and quicker
time & expense
 Arbitration
 Private
 Quicker and
cheaper?
 Control outcome
 Facilitation
 Informal
 Inexpensive

42. Power, Rights, Interests
All out “War”
Unilateral Action
Threats, Coercion
Power
Litigation
Costs
Go
Up
Arbitration
Investigation/Fact Finding
Conciliation
Mediation
Facilitation
Problem Solving
Negotiation
Control
Goes
Up
Rights
Interests

43. Facilitation
 Informal process
 Parties control process and outcome
 Facilitator ensures that all issues are addressed and all
parties have an opportunity to be heard
 Examples: partnering workshops; joint problem-solving;
facilitated negotiations (re-negotiations)

44. Mediation
 A more formal process of facilitated negotiation.
 The Mediator guides the process and helps the
parties negotiate more effectively.
 The Mediator does not decide who is right or
wrong.

45. Mediation
 Interest-based Mediation
 Mediator is a facilitator
 Focus on interests, not legal rights or obligations
 Options for creative solutions
 Evaluative Mediation
 Neutral evaluation
 Based on legal rights & obligations

46. Mediation
 Qualities of an effective mediator:
 Subject area knowledge
 Negotiation & mediation process skills
 Lets parties make key decisions
 Creative approach to the problem
 Patience

47. Arbitration
 Adversarial process.
 Less formal than litigation, but need to follow
procedural rules for fairness and efficiency
 Not necessarily quicker or cheaper than litigation
 Parties can select arbitrator with particular legal,
financial or licensing expertise
 Private – don’t “air dirty laundry”

48. Arbitration
 Qualities of an effective arbitrator:
 Subject matter expertise
 Active control over process
 Fairness and good judgment

49. Other Dispute Processes
 Executive Committee
 Formal escalation process
 Risk that positions become harder as they escalate
 Executives must remain engaged throughout the agreement
 Project Umpire
 Can facilitate or mediate resolution of project disputes
 Can also provide neutral evaluation or non-binding arbitration
 Umpire is engaged throughout the project
 Available to deal with issues on short notice

50. Resources
 Fischer, Ury and Patton: Getting to Yes, Penguin, 1991
 Ury: Getting Past No, Bantam, 1993
 Cohen: You Can Negotiate Anything, Bantam, 1980
 Mnookin, Peppet and Tulumello: Beyond Winning, Harvard
University Press, 2000
 ADR Institute of Ontario (ADRIO)
http://www.adrontario.ca/

51. Questions?